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Small businesses: Experts call for more support for struggling owners

The Advertiser 2020-07-29 19:30:00

Small businesses in Victoria, and particularly those in metropolitan Melbourne and Mitchell Shire, have been thrown a series of potential lifelines by the federal and state governments.

But do they go far enough?

A key announcement was the extension of the JobKeeper payment until March 2021.

Payments will be tapered in the December and March quarters and a two-tiered payment will be introduced from September 28.

Professor Kosmas Smyrnios, from RMIT University’s School of Management, said the JobKeeper extension was welcome, but other sectors needed to step up to help small businesses.


“Cashflow is the biggest problem being faced by small businesses at the moment and JobKeeper and JobSeeker have provided some cashflow — people are spending,” Prof Smyrnios said.

“But small businesses have an enormous number of fixed costs, like utility bills, rent and rates and they don’t have the same financial resources as the bigger end of town.

“We have to ask why the big end of town isn’t pitching in to help by offering reduced council rates and energy bills, for example?

“Government needs to encourage big business to support small businesses. Their confidence has been punctured and many of them are on the cliff edge.’’

Other initiatives outlined by the federal government include an extension of the support package to help small businesses employ and retrain apprentices and trainees.

The Coronavirus Small and Medium Enterprises Guarantee Scheme has also been revised and allows small and medium-sized businesses access to loans of up to $1 million over an extended five-year term.

Victorian Chamber of Commerce and Industry chief Paul Guerra said the outlook for small businesses in Victoria was tough.

“I don’t think I’ve seen this level of desperation in business in my entire career,” Mr Guerra said.

“There was some optimism around after the first lockdown but that has been taken away.

“People are wondering if we will face stage four restrictions or stay in stage three for longer? Business needs certainty and we don’t have that.”

But he said the support made available showed the federal government was listening.

“JobKeeper finishing in September was causing a lot of concern. Now we know it will be extended and how, and that has given businesses some confidence to map a path forward,” Mr Guerra said.

“But there are continued issues in the hospitality and tourism industries because of the exclusion of casual workers and employees who started post-March 1.’’

OPPORTUNITIES HEAT UP FOR INFRARED SAUNA BUSINESS

Within days of Victoria’s first lockdown, Alex Tyson’s infrared sauna business lost 40 per cent of its revenue.

This time around, though, in the second lockdown, the Vermont-based business is in a stronger position.

When Victoria first went into lockdown, Alex Tyson saw his family’s iHealth Infrared Saunas business teetering on the edge.

“We were slowly transitioning to an online business, but 30 to 40 per cent of sales were from trade shows and expos,” Mr Tyson said.

“We had installation teams in each state who set up exhibitions and then installed our saunas based on sales from those exhibitions, and we were particularly busy in winter months.

“But that weekend when Victoria went into lockdown, shows and expos were cancelled for the foreseeable future and that was 40 per cent of our business gone in an instant.”

But within 10 days, he developed a business model that has since delivered steady revenue growth.

He created a 14-day in-home trial offer that allows potential customers to have an infrared sauna installed at home for a $500 fee — $250 of which is a returnable bond.

At the end of the two weeks, customers can buy it or have the sauna dismantled and returned by an installation team.

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Mr Tyson said about 80 per cent of people ended up buying the product, which was used to help reduce pain, fatigue and stress.

“Unfortunately, I lost one person in sales because of the change in business and that was hard but we’ve increased our network of installers,” he said.

“I’ve just focused on opportunities. I knew we had clients, installers and stock, and I had to find a new way to bring that together.”

Originally published as How better support can keep small businesses afloat